Getting Risk Adjustment Right Is Key Under Any Individual Market Scenario

The affordability and stability of premiums in the individual health insurance market figure prominently in the recent and ongoing debates over national health policy. Often overlooked in these debates is the role of risk adjustment and other risk-mitigation measures in promoting both objectives. Risk adjustment is a vital tool in preventing community rating in the individual market from causing harmful risk selection against plans and insurers’ consequent risk avoidance. Effective risk adjustment lets insurers compete based on efficiency, networks, medical management, and consumer value, instead of by avoiding uncompensated risks. It also ensures that carriers can offer different levels of coverage, even though plans with the most comprehensive coverage are likely to disproportionately attract unhealthy members. To better understand the role risk-mitigation tools play in promoting a more stable individual market under both current market rules and proposed rules recently under discussion in Congress and the Trump administration, the Urban Institute, and the American Action Forum convened a day-long, roundtable summit with experts from academia, industry, and the actuarial community. Here, we highlight some of the key themes that emerged during the summit. The full participant list and further findings are provided in an issue brief. Risk Adjustment In The Current Individual Market Is Mostly Successful But Opportunities Exist For Improvement In general, risk adjustment cons...
Source: Health Affairs Blog - Category: Health Management Authors: Tags: Costs and Spending Following the ACA Insurance and Coverage American Action Forum Center for Consumer Information and Insurance Oversight individual market risk adjustment Urban Institute Source Type: blogs